Alan answers a question posed by Paul, who asks: I am retired and new to covered call writing. I have 1800 shares of VOO (Vanguard’s S&P 500 ETF). I want to use covered calls to generate cash- flow but my main concern is diversification and capital preservation. Should I use only OTM calls or can […]
Price Charts Tell a Story and Provide Guidance in Formulating Our Investment Strategies
Technical analysis is one of the critical tools available to us in selecting the best stocks for our option-selling strategies. Price charts are much more than a sequence of dots and lines…they tell a story about a company which, with proper research, ultimately leads to a series of rules and guidelines that will assist in […]
After-Hours Bid – Ask Spreads Can Be Deceiving
One of the BCI guidelines for selling covered call and cash-secured put options is that we require a bid-ask spread of $0.30 or less and/or an open interest of 100 contracts or more. Typically, options with large open interest will also be associated with smaller spreads. This makes it easier to close short positions at […]
Dow 30 Stocks and Covered Call Writing: Implementing the Premium Blue Chip Report
The risk inherent in covered call writing and put-selling is related to price decline in the underlying security. Investors with low-risk tolerance may turn to blue chip stocks which have proven track records of being reliable, cash-rich securities that frequently also generate dividends. This article will highlight how to utilize the monthly BCI Premium Blue […]
Increasing Capital Gains When Selling Stock: Another Use for Covered call Writing
Covered call writing is a low-risk option-selling strategy typically used to generate monthly cash flow. When we capture call premium into our brokerage accounts, we are lowering our cost basis thereby increasing the opportunities for successful trades. This strategy can also be crafted to increase our capital gains (or decrease capital losses) when we decide […]
Stock Repair Strategy: Using Stock Options to Reduce Losses When Stock Price Declines
Selling covered call and cash-secured put options are used to generate cash flow. Our knowledge of these options can also be applied to mitigating losses after a stock we own declines in value. This article highlights how options can be used to reduce losses in “stock only” portfolios. Although this article was scheduled to be […]
Covered Call Writing with Only One Security
Diversification is one of the key common-sense requirements when selling covered calls or cash-secured puts. When using individual stocks, the BCI guidelines are a minimum requirement of 5 different stocks in 5 different industries where any one position cannot represent more than 20% of our entire portfolio. We can use fewer securities when using exchange-traded […]
Strike Selection for Portfolio Overwriting Low Cost-Basis Stocks
Portfolio Overwriting is covered call writing using existing long-term buy-and-hold securities. It implies low cost-basis shares, dividend-bearing stocks and exchange-traded funds (ETFs). Since we don’t want our shares called away while generating additional option premium, cash flow decisions must be made on the best strike prices to select for our short calls. What is the […]
Establishing Our Option-Selling Goals: Total Portfolio Versus Individual Stock Perspectives
When selling covered call and put options we must first establish our initial time value return goals. We also should factor in upside potential when writing out-of-the-money call options and downside protection of those time value returns in bear and volatile markets. Do we accomplish these parameters based on our total portfolio returns or on […]
Buying Low and Selling High Also Applies to Option-Selling
Covered call writers hold two positions. We are long (own) the stock and short (sold) the call option. It is intuitive to investors that it is to our advantage if the stock price accelerates or at least does not decline in value. There are five possible outcomes in the stock portion of our trade: Stock […]
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ASK ALAN #152 Covered Call Writing with Only One Underlying Security
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Price Charts Tell a Story and Provide Guidance in Formulating Our Investment Strategies
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After-Hours Bid – Ask Spreads Can Be Deceiving
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Dow 30 Stocks and Covered Call Writing: Implementing the Premium Blue Chip Report
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Increasing Capital Gains When Selling Stock: Another Use for Covered call Writing
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The New Stock Market- Algorithmic and High Speed Trading
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Options That Expire Weekly and Conventional Expiration Cycles
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Why the 3% Guideline Applies to Puts but Not to Call Options
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Earnings Pre-Announcements Explained and Categorized
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Tax Implications of Writing Covered Calls against Long-Term Holdings
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John Alan, Great information! Thank you for getti
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Alan Ellman John, 1.The range is 1 - 5 with "1" b
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Terry "2 new files titled “Mean Analyst rating”
